SCANA Reports Financial Results for Fourth Quarter and Full Year 2017 and Declares Dividend on Common Stock for First Quarter 2018
Friday, February 23rd, 2018
SCANA Corporation announced earnings for the fourth quarter and full year of 2017.
For the year ended December 31, 2017, SCANA reported a loss of $119 million, or 83 cents per share, compared to earnings of $595 million, or $4.16 per share, for the same period of 2016. The decrease in earnings is primarily attributable to an impairment loss of $1.118 billion ($690 million, net of taxes), or $4.83 per share, associated with the VC Summer nuclear construction project. Earnings were also lower due to milder weather in 2017 and a loss arising from the re-measurement of deferred income taxes which was recorded upon the enactment of the Tax Cuts and Jobs Act of 2017 (tax reform).
SCANA's loss for the fourth quarter of 2017 was $445 million, or $3.11 per share, compared to earnings of $124 million, or 87 cents per share, for the fourth quarter in 2016. The decrease in earnings is primarily attributable to an impairment loss of $908 million ($559 million, net of taxes), or $3.91 per share, associated with the VC Summer nuclear construction project and a loss of $30 million or 21 cents per share arising from the re-measurement of deferred income taxes upon the enactment of tax reform.
FINANCIAL RESULTS BY MAJOR LINES OF BUSINESS
South Carolina Electric & Gas Company
South Carolina Electric & Gas Company (SCE&G), SCANA's principal subsidiary, reported a loss of $172 million, or $1.20 per share, in 2017 compared to earnings of $526 million, or $3.68 per share, in 2016. This decrease is primarily attributable to an impairment loss of $1.118 billion ($690 million, net of taxes), or $4.83 per share, associated with the VC Summer nuclear construction project. Abnormal weather decreased earnings by 10 cents per share for the full year 2017, compared to an increase of 19 cents per share in 2016.
For the fourth quarter of 2017, SCE&G reported a loss of $452 million, or $3.16 per share, compared to earnings of $93 million, or 65 cents per share, for the comparative quarter of 2016. This decrease is primarily attributable to an impairment loss of $908 million ($559 million, net of taxes), or $3.91 per share, associated with the VC Summer nuclear construction project. Higher electric and gas revenues, partially offset by generation fuel, purchased power, and gas for resale expenses, as well as lower operations and maintenance expenses contributed to earnings for the quarter, while higher depreciation, interest expense and other taxes lowered earnings for the quarter. Abnormal weather increased earnings by 2 cents per share in the fourth quarter of 2017, compared to a decrease of 8 cents per share in the same quarter of 2016. As of December 31, 2017, SCE&G was serving approximately 719,000 electric customers and 368,000 natural gas customers, up 1.3 and 2.9 percent, respectively, over 2016.
PSNC Energy
PSNC Energy, the Company's North Carolina-based retail natural gas distribution subsidiary, reported 2017 earnings of $72 million, or 50 cents per share, compared to $57 million, or 40 cents per share in 2016. This increase is primarily attributable to higher gas revenues from customer growth, a 2016 rate case, and an integrity management tracker.
Reported earnings in the fourth quarter of 2017 were $29 million, or 20 cents per share, compared to $27 million, or 19 cents per share in the fourth quarter of 2016. This increase is primarily attributable to higher gas revenues from customer growth, a 2016 rate case, and an integrity management tracker, partially offset by an increase in operations and maintenance expenses and the impact of the re-measurement of deferred income taxes upon the enactment of tax reform. At December 31, 2017, PSNC Energy was serving approximately 560,000 customers, an increase of 2.5 percent over the previous year.
SCANA Energy Marketing
SCANA Energy Marketing, which markets natural gas in deregulated energy markets, including Georgia where the Company does business as SCANA Energy, reported 2017 earnings of $27 million, or 19 cents per share, compared to $30 million, or 21 cents per share, in 2016.
Earnings in the fourth quarter of 2017 were $10 million, or 7 cents per share, compared to $7 million, or 5 cents per share, in the fourth quarter of 2016. This increase in quarterly earnings is primarily due to higher gas revenues from a return to normal weather in the fourth quarter in 2017 compared to an abnormally mild fourth quarter in 2016, as well as lower operations and maintenance costs, partially offset by the impact of the re-measurement of deferred income taxes upon the enactment of tax reform.
Corporate and Other, Net
SCANA's corporate and other businesses, which include the holding company, reported a loss of $46 million, or 32 cents per share in 2017, compared to a loss of $18 million, or 13 cents per share in 2016.
For the fourth quarter of 2017, these businesses reported a loss of $32 million, or 22 cents per share, compared to a loss of $3 million, or 2 cents per share in the fourth quarter of 2016. This decrease is primarily due to the impact of the re-measurement of deferred income taxes upon the enactment of tax reform, as well as higher legal expenses of approximately $8 million.
IMPAIRMENT CHARGE
The Company recognized an impairment loss for the year ended December 31, 2017, totaling $1.118 billion ($690 million, net of tax) associated with the VC Summer nuclear construction project. This loss reflects impacts similar to those that may have resulted if SCE&G's proposed solution announced November 16, 2017 had been approved and implemented. For the quarter ended December 31, 2017, the Company has recognized a pre-tax impairment loss totaling $908 million ($559 million, net of taxes).
TAX REFORM
On December 22, 2017, tax reform was enacted. As required, the Company's deferred income taxes were re-measured to reflect the reduction of the federal corporate tax rate from 35% to 21%. Although this re-measurement has a limited impact on earnings in SCANA's regulated businesses, the re-measurement had a significant impact on SCANA's non-regulated operations. In total, SCANA and its subsidiaries charged $30 million, or 21 cents per share, against earnings. Over ninety percent of SCANA's business is rate-regulated, with income tax cost being generally passed-through to customers. As such, the impact of tax reform on SCANA's earnings in the future is not expected to be significant.
DIVIDENDS
SCANA's Board of Directors declared a regular quarterly dividend of 61 ¼ cents per share on the Company's common stock for the quarter ending March 31, 2018. The dividend is payable April 1, 2018 to shareholders of record at the close of business on March 12, 2018.
The payment of dividends will be evaluated quarterly by SCANA's Board of Directors and the dividend for the first quarter of 2018 is consistent with the quarterly dividend rate for 2017 and permitted by the terms of the merger agreement with Dominion Energy.